THE ECONOMICS OF STARVATION‐I

We now have the rest of history in which to find out what happened in the Nixon‐Ford years. But there are some stories that need to be told at once. One is the story of what happened to United States food policy, and what the consequences were for poor and dying people around the world.

United States food exports have changed in the 1970's, from aid to trade. All through the 1950's and 1960's, the United States sent fleets full of food to developing countries. More than 50 percent was paid for under United States aid programs. Now, the fleets still leave, but almost all the food is sold for dollars.

Eighty‐five percent of United States agricultural exports to developing countries are now counted by the Government as commercial sales. The change affects even the most destitute people. Since 1973, the very poor countries (which the‐ United Nations call “most seriously affected” by the recent economic crisis) have bought more than 60 percent of their farm imports from the United States on commercial terms, as compared to less than 20 percent until 1972. America's trade with these countries is a business for the Continental Grain Company, the Chase Manhattan Bank, the hedgers and speculators in the Chicago grain exchange.

The change in agricultural trade is part of a quite general transformation. In the 1970's, and following the explicit objectives of Richard M. Nixon's foreign policy, the United States has given up many of the economic costs of world power. Where the Government once sent foreign aid, United States banks now make commercial loans; where the United States provided military assistance, Lockheed and Northrop now sell planes.

But in food, the horrors have already happened. It is possible to see what commercial food crisis will be by look ing at events that took place two years ago: at the hidden story of United States policy toward Bangladesh in the months before the famine of 1974.

The Bangladesh crisis was played out almost entirely in private markets. For almost twenty years, people in Bangladesh and earlier in East Pakistan, which it had been called, have depended upon United States wheat, sent as aid. But United States food aid was cut in 1974, to Bangladesh and other countries. To compensate, Bangladesh became a commercial customer for United States food. Eighty percent of its farm imports from the United States in 1974, worth over $160 million, were sent on commercial terms.

By the summer of 1974, Bangladesh could no longer pay for the food bought. The price of wheat had tripled in the exchanges where United States grain is sold, and Bangladesh bought much of its food at the worst moment, when prices were highest.

One week in July, therefore, Bangladesh was obliged to cancel its contracts to buy 230,000 tons of United States wheat—or about one month's supply of imported grain. The wheat was ready, a trader with Continental Grain of New York recalled, but there was no money. He said: “We had free charter to ship and the ships were waiting to load. Time Just ran out.” If the grain had been shipped, it would have arrived in Bangladesh at the time of the famine, in October.

United States officials observed these commercial proceedings, but the Government chose not to intervene in the workings of free enterprise. “When it came time to actually finance the grain (either by cash or short‐term credit) the financing was not available,” the United States agricultural attache in Dacca reported to Washington.

An official in the Agriculture Department recalled hearing that Bangladesh's representatives had approached the Chase Manhattan Bank and other lenders on three continents. “Everyone of them told them the same thing,” he said. “They wouldn't touch it. Bangladesh's rating was zilch.”

After the sales were canceled, the United States Government agreed to “expedite” its own aid. But no new United States shipment of wheat arrived in Bangladesh until Christmas, when the worst of the famine was over.

The explanation of United States policy to Bangladesh, as will be seen (in part two of this article) involves intricate political forces. It has to do with the Government's Indochina policy, and with the relationship of Bangladesh, Cuba and the world jute market. But the story will also show how badly United States procedures work in the new conditions of agricultural trade: in the commercial wilderness where dying people buy food for dollars.

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A version of this archives appears in print on January 10, 1977, on Page 15 of the New York edition with the headline: THE ECONOMICS OF STARVATION‐I. Order Reprints|Today's Paper|Subscribe